(By Salman - iStockAnalyst Writer)

US stocks finished with solid weekly gains on hopes that the massive stimulus plan and bank rescue package will bolster the US economy.

For the week, Dow was up 279.73 points or 3.5%. S&P climbed 42.72 points or 5.17%, while Nasdaq Composite settled with a weekly gain of 115.29 points or 7.80%.

Stocks rallied after a Treasury official announced that U.S. Treasury Secretary Timothy Geithner will unveil a bank rescue plan in a speech on Feb. 9. Investors also snapped up the beaten down stocks after gloomy data on the economic front reinforced the notion that Senate will quickly pass the stimulus bill.

A government release on Friday showed US labor market worsened in January. According to Labor Department, the economy lost 598,000 jobs in January, worse than 540,000 job losses expected by economists. The unemployment rate shot up to 16 year high of 7.6% in January from 7.2% in January. Economists had predicted the rate to rise to 7.5%.Similarly, ADP survey on Wednesday reported that a total of 522,000 private-sector jobs were lost in January, worse than the 515,000 expected by economists. Consumer spending in the US fell in December for a record sixth consecutive month, suggesting that consumers continued to cut back on their spending even in crucial holiday season.  
However, there were few bright spots amid the gloom. The Institute for Supply Management reported that its index of manufacturing activity rose to 35.6 in January from 32.9% in December. Service sector too contracted at a lesser pace in January. The Institute for Supply Management on Wednesday said that service sector index rose to 42.9 last month, from December's downwardly revised reading of 40.1.Economists had forecast the index to drop to 39.

Meanwhile, President Barack Obama announced a limit of $500,000 on the salaries of top executives at companies that receive significant amount of federal assistance.

Shares of Bank of America (NYSE: BAC), which plunged to two decade low on fears of nationalization recovered later in the week after CEO Kenneth Lewis dismissed rumors of a possible government nationalization of the bank as “absurd.”

Investors sorted through a mix of quarterly results this week. Companies such as Walt Disney Co. (NYSE: DIS), Kraft Foods (NYSE: KFT), MetLife Inc. (NYSE: MET) Mattel Inc. (NYSE: MAT), Rockwell Automation Inc. (NYSE: ROK), Humana Inc. (NYSE: HUM) and Aon Corp (NYSE: AOC) reported a sharp fall in their quarterly profits.

Dow Chemical Co. (NYSE: DOW), Hartford Financial Services Group Inc. (NYSE: HIG), News Corp. (NASDAQ: NWS), SanDisk Corp. (NASDAQ: SNDK), Cigna Corp. (NYSE: CI), Time Warner Inc. (NYSE: TWX), D.R. Horton Inc. (NYSE: DHI), Motorola Inc (NYSE: MOT) and Electronic Arts Inc.(NASDAQ: ERTS) posted quarterly losses.

Visa Inc.